Jim Witkowiak - the former Milwaukee alderman who runs a large local funeral home - is used to burying bodies.

On Tuesday, he dug up some old skeletons.

In stunning testimony before a Common Council committee, Witkowiak said a local businessman offered him a $2,500 bribe in early 2011 to help clear the way for a liquor store near Witkowiak's district on the city's south side.

"Wow," said Ald. Tony Zielinski, chairman of the city Licenses Committee. "I couldn't believe what I was hearing."

Witkowiak, who lost his seat last year, told the City Hall audience that he immediately alerted the FBI after receiving the large envelope with 25 $100 bills. Three agents then recorded a conversation between the alderman and the businessman, Inderjeet Dhillon.

"The FBI agents instructed me to ask Mr. Dhillon what the $2,500 was for," said Witkowiak, who spent 16 years on the Common Council. "I asked Mr. Dhillon that question, and he replied that it was for me.

"I replied, 'Fine, I understand that, but what is the purpose of this money?' Mr. Dhillon replied, 'So you can help me get my liquor license at my store on 6th St. and Becher.' "

Officials with the Milwaukee office of the Federal Bureau of Investigation did not return calls on Tuesday afternoon. Sources suggested that the probe is ongoing.

Dhillon said in an interview that his actions were being misconstrued.

He said he intended the cash as a campaign donation, noting he has given to Witkowiak in the past.

"Why did he lose election if he's a good alderman?" Dhillon snapped.

Witkowiak made his remarks at a hearing in which the city Licenses Committee was considering a new liquor license application from Dhillon, who wants to open an Indian restaurant that would also sell packaged liquor on the south side.

The testimony had immediate repercussions.

Dhillon's lawyer, David Carr, and two advisers - former acting Mayor Marvin Pratt and Hispanic operative Juan Carlos Ruiz - abandoned the businessman even while the license application was being discussed.

"First, the applicant comes to the (witness) table with Juan Carlos (Ruiz), Marvin Pratt and his attorney," Zielinski said, setting the scene. "They take a break. Juan Carlos doesn't return. The attorney announces he's recusing; he leaves. Marvin Pratt, sometime thereafter, announces he's withdrawing. You just have the applicant sitting by himself at the table there."

Apparently, these experienced political hands were taken aback by the allegations.

"We didn't know anything about this," Ruiz said later.

Pratt was even more pointed: "It was weird and unprecedented."

The committee voted 4-0 against granting Dhillon a liquor license.

In his remarks, Witkowiak painted the scene as something bordering on slapstick.

He said Dhillon invited him to lunch at the Royal India Restaurant at 3400 S. 27th St. on Jan. 27, 2011. The two chatted about their families and the weather, with Dhillon explaining that he wanted the two to become friends.

But when Witkowiak got up to go, Dhillon offered him a sealed, business-sized envelope. Witkowiak said he returned the envelope, prompting Dhillon to return it once again. They continued the back-and-forth five times until the alderman walked to the exit, and the businessman stuffed the envelope in Witkowiak's pocket.

"By now, several people in the restaurant had noticed there was some sort of conflict brewing, so with the envelope in my pocket, I went to my car door, drove two blocks away from the restaurant, pulled over and called the FBI to report the incident," Witkowiak testified.

He ended his remarks by saying the FBI took the envelope and promised to get back to him if he was needed. He said agents were aware that he was offering testimony on Dhillon's liquor license application.

Witkowiak was a member of the Licenses Committee for a dozen years, leading it for one term.

But he said he was not on the panel at the time of the alleged bribe. He said he had previously killed Dhillon's efforts to open a liquor store in what used to be Witkowiak's district. Witkowiak said he thought there were too many establishments selling booze in the area already.

Local residents say there are 43 liquor stores within a half-mile radius of Dhillon's proposed store.

Dhillon had given some legal campaign contributions in the past, Witkowiak said. But Witkowiak quit depositing Dhillon's checks after a while.

"It was not like I was after him for money," Witkowiak said. "I never was. I didn't want his money."

Interestingly, Dhillon did not offer a response to the charges during the committee meeting. He said later that he was "too scared" to say something that would offend current aldermen.

Dhillon said FBI agents had met with him but he couldn't remember when exactly.

Ald. Joe Dudzik, a member of the Licenses Committee, asked Witkowiak during the meeting if he had previously received offers of bribes in his time at the city.

Witkowiak said this was a first.

But it's not as if such actions never occur. Former Ald. Michael McGee is serving a 6 1/2 -year prison term for using his power over liquor licenses in Milwaukee to shake down business owners for cash, food and cellphones.

In fact, federal prosecutors included Inderjeet and Gurmeet Dhillon on the list of potential witnesses against McGee in 2008.

Inderjeet Dhillon, whose wife is named Gurmeet, told No Quarter that those were two other individuals with the same name who were involved in the McGee investigation.